Households aren’t buying homes, and rising rents mean that renters are not buying homes, said Ohio Senator Sherrod Brown, chairman of the Senate Banking, Housing, and Urban Affairs Committee.Just one illness, job loss, or car repair away from an eviction.”
“An increasing number of investors are buying single-family homes — homes that first-time homebuyers usually buy — and are renting them out at very high prices,” Brown, a Democrat, said in his opening statement. Twenty-eight percent of homes sold at the beginning of this year went to investors.
One of the witnesses was Matthew Desmond A Professor of Sociology at Princeton University and director of the Eviction Lab, the country’s only research team devoted to understanding the causes and consequences of housing instability in America.
Desmond said areas across the country have seen skyrocketing rents. Since 2000, he said, median rent has increased 112% in the Midwest, 135% in the South, 189% in the Northeast, and 192% in the West.
“Last year, rents increased faster than they’ve ever been,” he said, adding that the average rent across the country increased 17% in one year.
He said that some cities witnessed double that, such as 40% in Portland, Oregon; 35% in Newark, New Jersey; 30% in Orlando, Florida; and 29% in Cincinnati, Ohio.
“When the cost of housing goes up by 15, 25, 30%, what can families do?” Desmond said. “They cannot move into affordable housing because they often already live in the cheapest apartments available. All they can do is cut back on other necessities, including healthcare, educational enrichment, and food.”
The committee’s leading Republican, Senator Pat Toomey of Pennsylvania, blamed the Biden administration for inflation and said:The government, and especially this administration, has often been the problem, not the solution, when it comes to housing.”
“Wasteful Democratic spending, growth killer regulation, and excessive accommodative monetary policy are exactly what drove inflation up to 40 and shrunk our economy,” he said in his opening statement.
Tommy asked a witness, Darion Dunn, who is it Managing partner of Atlantica Properties in Atlanta, Georgia, if government actions that raise costs for landlords pass to tenants.
“That’s generally the case,” Dunn said. “These costs have to be crossed because they are relatively small margins.”
Senator John Tester, a Democrat from Montana, said people in his state are also having trouble finding affordable housing.
“Price points have gone up too much,” he said, adding that Average home sale price It increased about 40% in his state in the past year.
“This is driving more people from potential homeowners to looking for homes for rent,” he said.
One witness asked: Laura Bronner CEO and President of the Greater Cincinnati Port Development Authority, What can happen to communities where home ownership is out of reach.
“There is a profound effect on local families when they are denied home ownership,” she said.
Investors are buying homes
Institutional investors are market players who have access to capital and can be anything from private equity firms to financial institutions through REITs.
Brunner told senators that institutional investors are changing the single-family housing landscape in Hamilton County, Ohio.
She said access to affordable rents and housing has been made more difficult by institutional investors. While investigating some of Cincinnati’s worst property owners, her team found that more than 4,000 single-family homes in Hamilton County had been purchased by five institutional investors since 2013.
One of those institutional investors, VineBrook Homes, was lawsuit by the City of Cincinnati for building code violations, tenants for poor living conditions and fraudulent security deductions.
Brown asked Brunner what Congress could do to help places like Cincinnati make homes affordable for families and promote families to become homebuyers.
One way that makes it easier for local jurisdictions to find real estate owned by institutional investors, usually offered under LLCs, is to require these investors to register in the local areas, she said.
For example, VineBrook is listed among the 90 LLCs, which makes it difficult to track them.
In 2021, Desmond said, it was estimated that institutional investors made up about 2.3% of the single-family rental market, or 340,000 single-family homes.
But while that’s small, he said, these investors “have a much bigger footprint” in some metropolitan areas, particularly in sunbelt cities like Atlanta, Georgia; Phoenix, Arizona; Tampa and Miami, Florida; and Charlotte, North Carolina.
That could mean that 50% of the homes on the street are owned by institutional investors, Brunner said in Hamilton County.
“When the geographic impact is so concentrated, it has a game-changing effect on what it means to live in this neighborhood,” she said.
These institutional investors do not build homes, she said.
“They’re turning homeowners’ properties into rental properties and raising rents,” Brunner said.
“There is no doubt that we need more housing,” said Senator Raphael Warnock, a Democrat from Georgia.
In his state, he said, about 45% of Georgians spend more than 30% of their income on rent, and 1 in 5 spends more than half of their income on rent.
“Georgians are rent-crunched all over the state,” he said.
Ask Warnock Yentel how long it will take to supply housing in the end Right.
“It will take years, if not more than a decade,” she said.
Diane Yentel, President and CEO of National Coalition for Low Income HousingAnd the He also said that stagnant low wages and rising housing costs have played a major role in housing instability. NLIHC is a non-profit organization that advocates for affordable housing in the United States
“Rising inflation, rising rents and declining real wages are a major challenge for low-income renters,” she said.
Intel said the average wage in the United States would need to work 96 hours a week to pay rent for a two-bedroom home, or work 79 hours a week to afford a one-bedroom home at a fair market rate.
The NLIHC estimates that the housing wage — the hourly wage a full-time worker must pay to purchase an apartment without spending more than 30% of his or her income — of $25.82 per hour is required for a modest two-bedroom home. The federal minimum wage is $7.25. The city with the highest minimum wage in the country is SeaTac, Washington.
Yntel said more than 24 million people work in five of the lowest paying occupations — retail, food and beverage, personal care services, home health aid, building cleaning and food preparation services.
Senator Bob Menendez, a Democrat from New Jersey, said the average renter in his state is barely able to pay for a one-bedroom home. Yentel asked how transportation can be a problem for low-income renters, who may rely on public services.
“We also have to be careful when we work on transit, so as not to cause displacement or gentrification,” she said, adding that existing affordable housing needs to be maintained.
Even with the wage increase, Desmond said, the relief from rental costs was only temporary. said since then 1985, rental prices outpaced income gains by 325%.
. was martyred study by Federal Reserve Bank of Philadelphia which found that “landlords responded quickly to wage bumps by increasing rents, which reduced the impact of the policy.”
“The implication is that investing in affordable housing is not only necessary to ease rent burdens on families and promote community stability,” he said. “It is also necessary because of the success of all other economic mobility efforts that depend on it.”
White House Summit
Separately, the White House held a summit Tuesday where Desmond, Yntel and other housing and eviction experts have discussed permanent eviction reforms.
The White House said that as emergency rental assistance funding begins to decline, the summit will focus on a “comprehensive effort to build lasting reform,” including through the use of remaining emergency recovery funds.